2015-07-22 00:00:00 Money & Finance English https://d3hrajprm8dqcv.cloudfront.net/wp-content/uploads/2017/05/08194939/shutterstock_1508095881.jpg Transitioning from Bootstrapping

Transitioning from Bootstrapping

2 min read

As discussed in a previous article, bootstrapping is the financial resources and revenue that a firm uses to help the business grow. Sometimes, businesses may grow exponentially and require funds above and beyond the funds that a business startup can fuel by itself. Here are steps that your company can leverage when you are transitioning from a bootstrap business:

Increase in capital inflow: If you have secured an investor, there will be an increase in the infusion of capital through seed funding or funding through venture capitalists buy into your business. Be sure to channel these resources wisely to make the most of them.

Factoring the business: This is a financing method when you sell accounts receivable to a buyer to raise capital. Factoring can be done on a non-notification basis. For start-ups, it is advised that businesses should not undertake factoring without acquiring capital from external sources.

Boost your business through Crowdfunding: Choose a platform and get your company crowd-funded by gathering support from external financial institutions. This is a practice that acquires funding by raising monetary contributions from a large group of people.

Develop through leasing: When you are short of funds and are looking at avenues to fuel your business, leasing can help you. The leaser can benefit from tax benefits and the lessee can benefit from making small payments towards the lease.

Microfinance your business: You can get funding for your business through small term loans when your business has no access to banking and related services.

Evolve your business through supplier financing: This method works with your supply chain to get the money that fuels your business. It usually works best with SMB and business start-ups, where there are looking to buy into your business and are willing to work with you.

Reduced control over the business: The ownership of your business will change, the moment you acquire funds from external sources.  This will also change the way your business will function as you are now answerable to financiers that are outside the business.

Grow your team: You can now utilise resources to build your team. If you find it difficult to grow your business, now is the time, as you can focus your efforts on bigger roles and utilise your capital for maximum gain.

With your business growing at a rate higher than you can finance it, your business startup should look to external investors for assistance. This will help you focus on growing your team, spending on your business instead of ancillary functions like taxation and accounting and expanding your reach. This will help you get the right amount of capital required to ensure that your business runs smoothly. This can be done without having to approach other financial regulatory bodies to garner enough investment that would ruin the functioning of your business and your authority to run it.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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